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Madison Avenue Wants to Crash Netflix, Amazon

When Ben Watkins wanted to buoy the quality of his series “Hand of God,” he turned to what might be an unlikely partner: an online compendium of real-estate data.

Zillow, the real-estate listings site, paid Watkins and his team to include the company’s name in a plot line in which a character seeks to move somewhere new. Working with an advertiser “is a great way to get things you normally could not get,” he said.

Product placement has been around since TV sets were stand-alone cubes far too heavy to be attached to the wall, as anyone who watched “Texaco Star Theater” in 1948 might be able to tell you. But “Hand of God” streams via Amazon, and subscription video-on-demand services run by the online giant and Netflix don’t often run traditional commercials – if at all. In many cases, the outlets don’t have a regular apparatus to insert product and pitches into series like “Transparent” or “House of Cards.”

Madison Avenue hopes to change that – quickly.

“More and more clients are struggling with the problem of eyeball shifting,” says Brendan Gaul, chief content officer at Interpublic Group’s Universal McCann, a large media-buying firm that works for Coca-Cola and Johnson & Johnson, among others. With more consumers opting to watch shows from streaming hubs,  “our clients are coming to us, asking us to help them solve that problem: How do they get into the content, and how do they get into it in a meaningful way?”

Advertisers shift their gaze to streaming services as viewership of a longtime standby –  traditional TV programming – in in flux. Total use of “television” programming among adults between 18 and 49 fell 5.9% in September, according to Pivotal Research Group analyst Brian Wieser, compared with the same decline in August and a dip of 6.1% in June. “Viewing of unrated programming through internet-connected devices and of premium video on PCs, tablets and mobile phones are undoubtedly accounting for some of these declines,” the analyst said.

Meantime, some portion of that traditional TV consumption is going ad free. Both AMC Networks and Fox Networks Group’ FX Networks have announced the launch of subscription-based services that will not run traditional commercials. Fox’s FX+ would run on Comcast and cost $6 per month for access to ad-free versions of many of the networks’ original series. AMC and Comcast are offering something similar for $5 a month.  With Nielsen announcing a new effort Wednesday to measure viewership of content that streams on Netflix, and with the streaming-video service noting this week it intends to spend between $7 billion and $8 billion on content in 2018, advertisers wonder if a new stream of ad revenue might help the company lighten its load.

As more so-called “over the top” services crop up, there is new pressure on streaming players to develop sturdier financial models that involve advertising, suggested Claudia Cahill, chief content officer at Omnicom Media Group, one of the nation’s largest media buyers that includes Pepsi and Apple on its client roster. “Streaming platforms are on our innovation check list to focus on and try to figure out while still in the malleable stages,” she says.

Netflix “ has probably set the highest bar” against commercials, says Cahill, but advertisers remain interested. Meanwhile, Amazon has “gone out with a group, a traditional sales group that understands the desire. We are all working together to try to figure out how to connect all of their offerings – data, ad models, e-commerce – to create something robust for clients.”

Besides, some streaming services, including Hulu and Crackle,  already run ad-supported options. CBS Corp. is open to weaving products into the programs it streams on its growing SVOD service, “CBS All Access,” the company said in a statement.

Chances are Netflix viewers won’t be forced to pause for a commercial break during “The Defenders” or “Stranger Things.” And even though Amazon runs sponsored banners on the home page of its video-streaming operation and has begun to run commercials when it streams “Thursday Night Football,” it’s hard to imagine more traditional ads usurping its programs. Amazon and Netflix declined to comment.

But advertisers’ products have been turning up in their shows for years.  Executives at Branded Entertainment Network, a company that works to weave advertiser products into content and is controlled by former Microsoft leader Bill Gates, have placed General Motors’ Buick in Netflix’ “House of Cards” and Jose Cuervo in its “Fuller House” (above, pictured).

The company does this largely by working with production crews and looking at elements the shows might need to appear more realistic. “We get involved early on a project where we are talking about characters and about story lines that are going to be coming up,” explains Caressa Douglas, senior vice president of content at the company.  Show producers “can actually get our suggestions or mention brands that might be a good fit.” Watkins, the producer, says Amazon allows his team to strike its own deals to help augment production, but notes he has been given a list of categories Amazon does not want involved in its programming.

Some advertising executives believe more is in the works. Kellogg Co. allowed its Eggo waffles to appear in Netflix’ “Stranger Things” without a financial transaction, but found its presence spurred people to talk about the product in a significant way. “Eggo had more social mentions than over half of the Super Bowl advertisers,” says Trinh Le, marketing director for Eggo, in a statement.

Madison Avenue can’t ignore the streaming services, because they tend to attract an advertiser’s favorite customer: someone who is young and still eager to try new brands. But this field is trickier. Younger consumers were never taught they had to sit down at a certain time and day to watch an hour-long TV program that is routinely interrupted by commercials. If they do embrace something, however, they are more likely to share it with others, making a battle for their hearts and minds worth fighting.

“The opportunity for such content to be immediately available and more positively prone to word of mouth between family, friends or colleagues” is quite appealing, says Raymond Warren, senior manager of media and multicultural at General Motors’ Cadillac. Because streaming programs require subscriptions, he adds, viewers are likely to be more engaged. Supporting streaming content, he says, “will be increasingly important.”

Hulu, which is owned by Comcast, Time Warner, Walt Disney and 21st Century Fox – some of the nation’s biggest producers of TV content – has been quite open to advertising in many forms. When the company launched, executives would brag about a technology that allowed users to choose the type of commercial they wanted to see. A user could watch a movie trailer, for example, or a pitch for a new car. These days, says Peter Naylor, Hulu’s senior vice president of ad sales, the company has lured Coca-Cola and Lexus to its runs of “The Mindy Project.” And there are some intriguing experiments on the horizon: “We are going to do some brand integration into some virtual-reality projects we are working on,” Naylor says.

Madison Avenue is likely to have continued entry to streaming programs. Watkins, the “Hand of God” producer, is eager to make his shows seem more realistic by using real-world gadgets and products. “I want to be able to partner with brands that feed into the world that we are building,” he says. “The ideal scenario is you get extra money for the budget, but it’s also good for your story.”

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